Brown tackles SIPPS and REITs

by Brian Turner

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Gordon Brown sent mixed signals to the financial sector today, with announcements that residential property will not be eligible for SIPPs (Self Investment Pension Plans) - however, he still plans to open the UK property market to general investment via REITS with legislation in 2006.

The problem for the treasury on SIPPs is two-fold - firstly, in a runaway housing market that is killing first-time buyers, SIPPs with property threatens a future where people compound the issue by investing in second homes for pension provision.

Secondly, allowing tax relief on property investment could cost the Treasury as much as Â£4 billion, it is claimed.

However, investment in property will still be allowed via REITs, but only as part of general find-management. Tax rules and costs involved in converting to a REIT company are still uncertain.

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